The argument is sometimes made that the United States should not trade with low-wage countries. The reasoning is that more highly paid U.S. workers cannot compete, and U.S. jobs are lost. What is wrong with this argument?
What will be an ideal response?
The argument is based on the false premise that competitiveness is determined solely by relative wages. The relevant concept is cost efficiency-that is, output per dollar. U.S. workers can effectively compete with lower-wage workers by producing more output per dollar of wages.
You might also like to view...
In an all-currency economy in which real output and the real interest rate are fixed and the rates of money growth and inflation are constant, the inflation rate equals
A. the real interest rate. B. the nominal interest rate. C. the level of real seignorage revenue. D. the growth rate of the nominal money supply.
Compared to the long run, consumers typically ____ to price changes in the short run
a. are very responsive b. are more demand sensitive c. are less demand sensitive d. do not respond at all e. overreact
Suppose a fast food restaurant was one of many hiring workers, the minimum wage was $7.25 an hour, and it was paying $7.25 an hour to new employees. Suppose a worker earns a $0.75 raise to $8 an hour. Now suppose the minimum wage rises to $8.25 an hour. The government requires this worker to be paid
A. $8.25 an hour. B. $9.00 an hour. C. $8.00 an hour. D. somewhere between $8.25 and $9.00 an hour depending on the policies of the restaurant.
A change in the price of a product will change the supply of that product
Indicate whether the statement is true or false